By BLOOMBERG / Pic AFP
DALLAS • Delta Air Lines Inc vowed to cut its daily cash burn in half by the end of June as the carrier rushes to scale back operations amid a collapse in travel demand.
The company will be going through only US$50 million (RM218.21 million) a day when the second quarter (2Q20) draws to a close, CFO Paul Jacobson said in a statement yesterday as Delta reported financial results. The figure was US$100 million at the end of 1Q20 as the coronavirus pandemic spread and many customers cancelled trips.
US airlines are slashing expenses and relying on government aid to get through the worst crisis in the industry’s history. Delta, the first major US carrier to report 1Q20 earnings, has parked 650 aircraft, cut flying capacity 85% this quarter, frozen hiring and lowered executive pay to save money. About 37,000 employees — more than a third of Delta’s workforce — have agreed to take short-term leave without pay.
“These are truly unprecedented times for all of us, including the airline industry,” CEO Ed Bastian said in the statement. “Government travel restrictions and stay-at-home orders have been effective in slowing the spread of the virus, but have also severely impacted near-term demand for air travel.”
Delta swung to an adjusted loss of 51 cents a share in 1Q20, compared to earnings of 96 cents a share in the same period a year ago. Sales in 1Q20 tumbled 18% to US$8.59 billion. Delta suspended 2020 financial guidance earlier this year.
The Atlanta-based airline raised US$5.4 billion in capital since early March, including a US$3 billion secured term loan and US$1.2 billion in aircraft sale-leaseback agreements.
Delta will receive another US$5.4 billion in payroll support from the US Treasury Department, including a US$1.6 billion unsecured loan for which the government will receive warrants for 6.5 million shares of company stock.
Delta is also eligible for US$4.6 billion in secured loans from the US government, should the company decide to apply for and accept the funds. The carrier said it would end 2Q20 with about US$10 billion in liquidity.